Month: August 2010

Japanese automaker Honda Motor Corporation will recall almost 400,000 vehicles sold throughout the United States due to ignition issues. The company’s shares were trading at a 1.2% decline from their previous rate after the company announced intentions of recalling the vehicles, which those involved in the automotive industry believe could cost the company tens of millions of dollars.

Honda is one of the world’s largest automotive and heavy industries companies, building millions of vehicles annually and competing in both the consumer cars and motorcycle markets. The Japanese corporation also manufacturers engines and equipment for boats and specialist engines for vehicles designed to provide public transportation or suited for specific industrial tasks.

The affected vehicles include the Accord, Civic, and Element – three cars popular throughout the United States. The problem in question affects the ignition system of the vehicle, causing random shutdowns of the engine without the car in locked gearing. Safety experts believe that the defect is unlikely to cause injury or pose a threat to drivers, although it may result in a small loss of control.

While this recall is likely to gain less negative press than Toyota’s large vehicle recall earlier this year, it’s the second of its type for Honda this year. Earlier in 2010, the company’s road motorcycle division was forced to recall thousands of VT1300 motorcycles which were sold throughout the country using the wrong axle weight stickers. Once again, the fault in question provided no major safety risk for users of the motor vehicles, although it may have affected reliability.

Honda also ran into trouble this year due to a failing battery issue. The company has since replaced the affected batteries free of charge, leading many owners and brand enthusiasts to believe that the Japanese automaker will complete the recall process fairly smoothly both for owners and company shareholders.

The world’s most popular luxury car brand has seen its earnings skyrocket on the back of global demand increases and an exciting new lineup. BMW‘s profits for the second quarter of 2010 are some of the highest in years – a full six-times increase from the same period last year. The auto manufacturer has pointed to increased demand and greater consumer spending for the success.

BMW are one of the world’s most acclaimed luxury car brands, enjoying buyer loyalty throughout both Europe and many Asian countries. With developing markets like China demonstrating a new interest in luxury automobiles, many of BMW’s less popular models have found a new market in overseas destinations. The revised 5-Series vehicles saw the most sales growth in 2010.

Close to 400,000 vehicles were sold worldwide throughout the quarter – an impressive figure for a luxury car manufacturer in an unexciting world economy. Automotive journalists have pointed to BMW’s new 1-Series and revised 5-Series design for the success, claiming that the less expensive compact car has opened BMW up to new buyers, while the new sedan has boosted mid-level sales.

The German automotive company also owns British marquee Mini, luxury brand Rolls Royce, and a series of other small vehicle manufacturers. The bulk of BMW’s earnings came from domestic and EU sales, although areas such as Taiwan showed extensive sales growth. The group has released a statement claiming that they are already planning for greater growth and profit in 2010.

A favourite of executives, BMW was one of the world’s most profitable automobile firms before the financial crisis of 2007. With the economy slowly improving, the German luxury automobile maker is aiming to push its sales back to pre-crisis levels while introducing a redesigned model lineup.

Zimbabwe’s economic downturn has been one of the most noticeable and prominent of the last decade. One of Africa’s recovered economies in the late 1980s, the nation has since fallen victim to a series of mismanaged policies and destructive economic ideas. With the United States dollar as its official currency and major food shortages, international investment in the country is almost nil.

But opposition politicians – those representing Zimbabwe’s Movement for Democratic Change – have suggested that diamond mining could represent Zimbabwe’s road out of poverty and economic mismanagement. It’s been heralded as a potential way for the country’s economy to expand by over $2 billion, although it’s come under some major scrutiny from human rights groups.

Blood diamonds have a lengthy history in Africa. The sale of raw diamonds has been used to fund numerous conflicts and pay for extensive human rights abuses, the most obvious of which occurred in Angola just over twenty years ago. But with the Kimberley Diamond Trading Agreement largely followed and welcomed in Africa, many believe that diamonds could help kick-start the economy.

Zimbabwe has its own history of diamond smuggling. An event in 2008 at the Marange diamond mine saw over eighty labourers killed by the country’s military and an attempted coverup arranged. Overseas investors and international diamond firms – themselves no stranger to unethical diamond trading – have called for greater security before foreign companies invest in diamond mines and processing plants in the country.

There’s also the problem of Zimbabwe’s labour market – a population that’s been largely starved of the skills that neighbouring South Africa has made publicly available. Investors have suggested that with the right degree of oversight, security, and the right labour situation, ethical diamond mining could become Zimbabwe’s path out of poverty and political mismanagement.

Major Mexican air carrier Mexicana Airlines has filed for bankruptcy following years of financial worry. The airline, the largest in Mexico, has struggled with expenses and low operating income for the better part of a decade. After failing in negotiations to replace a number of employees with contracted workers, the company has filed for bankruptcy and will revise its business strategy.

However, the airline will continue operations over the next few weeks while revising the way it operates. Management plans to bring the airline’s expenses inline with those in other countries while increasing profits to acceptable levels. Financial analysts have blamed the airline’s poor financial performance on pricing errors and the demands of a largely unionised domestic workforce.

The airline had expanded rapidly throughout the 1990s, increasing its employee base and enjoying reasonable profits. But with the swine influenza outbreak and Mexico’s worsening border conflicts, demand for domestic and international travel has decreased significantly. Expenses for the airline remain high due to its large workforce, while union agreements have prevented downsizing.

The global airline industry has been hard hit throughout the economic crisis, with consumer flights seeing significantly less demand than they had previously. Business travellers have also decreased over the past five years, although recent economic recovery has seen an increase in the amount of businesspeople using premium airlines.

However, low-cost air carriers have demonstrated that there is potential for alternative business models in the air travel space. Ireland-based RyanAir and Malaysian AirAsia have both reported steady profits and operating income over last three years, capitalizing on the demand for discount flights and inexpensive international holidays.

Mexicana’s two sister airlines – MexicanaLink and MexicanaClick – will continue to operate as normal throughout the bankruptcy protection case, as both are independently owned and operated.

With the economy on the rise, prices in the housing sector are creeping upwards, prompting what many real estate experts believe could be a major crisis in the cost and accessibility of housing to Britain’s employee base. Despite a fall in net exports, Britain’s economy has slowly recovered over the last year to a point of relative stability, although not everyone is reaping its gains.

City employees have been praised for improving economic stability – an unusual situation given then immense criticism many leading UK banks had been given just months before the economy began to improve. Yet with major banks and employers leading the UK out of its biggest trouble period in recent history, many believe that increased housing costs could hit employees hardest.

The average cost of a home rose from £166,351 to £167,425 in July – an increase that, if continued, could see the domestic housing market become one of the most costly and relatively inaccessible in Europe. Housing prices in the greater London area – one of Britain’s most important economic areas – are even greater, prompting many real estate experts to worry about a second housing ‘crisis’.

Property economists have highlighted the volatility made clear by such sudden increases, claiming that the UK’s housing sector will continue to attract rapid changes in value over the next year. July marks a high point for property investors – it appears that prices may begin to decrease towards the end of 2010.

For many first-time homeowners, that would be a very good thing. With unemployment still at high levels and Britain’s economy recovering slowly, higher housing prices will put property out of reach for hundreds-of-thousands of employees. Should price instability take over, many of Britain’s most enthusiastic real estate investors could see a lucrative, or disastrous, end to the year.

Outside of Europe, automaker Peugeot-Citroen has never been a major player. The French company has remained a major influence in Europe’s small and mid-sized car industry, releasing a large string of highly successful models every generation. However, with hot competition from Japanese motor vehicle companies and a lengthy list of regulations to cater to, the company is rarely seen in Asia.

However, the large auto company now has Chinese growth to thank for its success. Peugeot-Citroen sales steadily increased over the past year due to greater Chinese demand, particularly in the major economic centres of the country’s East Coast. On the back of greater demand in China and various other markets in Asia, the company has announced plans to sell half its cars in the region by 2015.

This marks the largest venture outside of Europe in the company’s history. Unlike the German and British automotive industries, which have typically survived on international demand, France’s big motoring companies have primarily operated within Europe. The company announced a partnership with China’s Dongfeng Motors in order to build an alliance within the country.

Revenue for the company has increased alongside the greater sales, growing by 21% over the last quarter and expected to grow further following European economic recovery. Vehicle sales have slumped within major Western markets due to the financial crisis, which has highlighted the value of Eastern markets to the world’s major automotive manufacturers.

With Chinese businesses continuing to expand and the country’s large middle class gaining access to disposable income, the automotive world is taking notice. Malaysian company Proton Auto has announced plans to export more cars to mainland China. A number of Japan’s major auto companies also plan to build factories within China as sales improve and the country’s regulations loosen.

Ask many Britons what they think of the ‘economic recovery’ and you’ll be hit with a fairly sceptical response. While the country’s economy continues to return to health, many of those left out of work by the recent recession continue to feel as if they’ve been left out of the recovery efforts. The profits we’ve heard about are often fuelled by job cuts, leading many to lose faith in the current recovery.

But the statistics don’t lie – both the economy and unemployment figures are improving throughout the United Kingdom. The Office of National Statistics has released survey data demonstrating a rise in jobs throughout Britain and a subsequent drop in the amount of individuals left out of work. Is it merely a pipe dream from employment agencies, or is there something really happening here?

For the most part, it appears that the increase in employment figures is backed up in reality. A large number of the UK’s biggest companies are expanding their employee base, attempting to return to pre-crisis operating levels within the next two years. An even greater number of small businesses have attempted to increase staff, all with intentions of working through the economic recovery.

However, the decrease in Britain’s unemployment rate hasn’t been uniform across the nation. While regional cities and towns have seen jobs return, largely to pre-recession levels, residents of London are still forced to cope with one of the worst job markets in recent history. While unemployment in the entire country dipped through July, it increased by over three percent throughout London.

Experts have pointed towards the recent layoffs by many city firms for the decrease in employment, claiming that increased profits will eventually resurrect axed positions. For now, it appears that this non-uniform recovery will continue throughout Britain until nationwide firms have healed.